What is an add-on?

In simple words, the word add-on means adding something new or an additional feature which increases the amount of the item to which it is added. 

Add-ons are the allocation or allotment of anything new or new commodities by the developers of companies that are demanded by the consumers and public. Those commodities or goods are not present in the stock of the company and they made those commodities when the consumer demands them. You can also utilize add-ons for some other works like fund new or keep going projects, pay for extensions, and to raise cash for your company. 

With the help of add-ons, raise money and improve the worth of the companies. However, sometimes they weaken existing shares of companies so use it conscientiously. Add-ons are also called secondary offers.  

Deep Definition:

When a company provides extra stock shares, existing investors hold a smaller stake in the company same as they did before the add-on. Suppose, a company at first provides 300,000 shares to the public, and one person purchases 30,000 shares. In this way, this person will become the owner of 10% of the stock of the company. The company later supplied another 40,000 extra shares, but if that person does not purchase those extra shares, his ownership will reduce from 10% to 8%. This can be called dilution.   

There is a method to estimate the incomes of the companies per share. When there is an increase in the shares of a company, but the earnings of the company are not improved. Then this will lead to a decline in the earnings with every share. This decline in earnings will lead to a fall in the stock rate. However, using add-ons will not every time lead to a reduction in stock, especially when the company is very popular.  

For understanding add-ons more deeply a word plug-in is also used. It also works as a third-party software that puts or adds up new tasks or functions to a host program of the computer without making any change in the program. Mainly, add-ons permit you to put new and latest elements to the hosting scheme or elongate its proficiencies beyond its original design.

Examples of Add-ons:

Although, these days add-ons are considered not good for shareholders and investors, but not in all cases. For instance, at the start, a company was $20 million and it is able to launch extra shares in the market. Then gathers $1 million and used this fund to buy a rival or competitor that can improve its market value. So, use the add-ons for increasing your market value to a sufficient extent.        

In some circumstances, companies can also use funds using add-ons to pay off loans or sponsoring loans at low-interest charges which enhances the monetary and economical conditions of companies. Moreover, moderators can have the ability to improve and ameliorate the companies. The reason is that moderators have lower debt rates. In this way, the worth of shareowners and inverters will increase or improved in the remote future. Thus, there could be seen a better financial measure using the add-ons. 

Some companies offer secondary equity which permits shareholders to trade a heap of shares with others. For instance, the secondary equity facility only takes place when a big or main shareholder like the owner of an exclusive equity company would like to trade or sell shares on a huge scale which is not so easy to trade during a normal trading session. However, the previously mentioned shares are awesome and they do not reduce the incomes or profits of every share. In this way, it does not influence the share negatively all because of add-ons. 

Perpetual or Stock-purchase warrants save the separate and independent shareowners from weakness. They permit the shareholders to purchase the shares at fixed or pre-agreed rates without any argument. Stock warrants also give the authority to shareholders to buy the wonderful stock or commodities at a fixed rate. These warrants are supplied straightly from the companies and also manufactured by those companies which make the new shares. 

During the trading, there comes an impact day when shares go public when companies provide their secondary shares available to the public. On this day, there is a possibility that the stock prices may fall sharply. 

However, using adds-on will also lead shareholders to trouble sometimes, but not always giving them downfall. Those companies that use funds to repay loans or debts, increase their economical conditions or create good business plans, perhaps making clever settlements that give profits in a long run to existing investors. But with short-term dilution can lead to long-term benefits for shareholders who are always ready to continue riding.